Millions of pounds could be saved from the NHS budget if doctors used the most appropriate drugs and treatments and stopped some out-of-date procedures, the government said yesterday.

Out - in most cases - should go the removal of tonsils and the insertion of grommets in children with glue ear, said the government's expert advisory group, the National Institute for Clinical Excellence (Nice), which is charged with ascertaining what drugs and treatments are cost-effective. Other areas where doctors will be advised to modernise are in the over-use of hysterectomies and antibiotics.

Launching a programme to identify obsolete practices and ineffective treatments in an increasingly cash-strapped NHS, the health minister, Andy Burnham, admitted that the soaring cost of new drugs was one of the reasons for the initiative.

In the few months since he had been in the job, said Mr Burnham, he had been constantly aware "of reading press reports about the next wonder drug, and that is an incredible pressure on the system. It is a pressure primary care trusts around the country are under". Some of the new cancer drugs that have been approved by Nice for use throughout the health service will cost the NHS around £100m a year.

Mr Burnham said Nice's programme "has the potential to save several millions of pounds for the NHS every year, but more importantly will potentially have the results of providing more appropriate and up-to-date care and prevent unnecessary and ineffective treatments."

A prime example, which was raised by the chief medical officer, Sir Liam Donaldson, in his annual report, is the practice of removing children's tonsils. In the early 20th century, it was thought advisable in children with tonsillitis and it became a common operation among children from the higher social classes, said Mr Burnham. Now it is considered unnecessary in most children - but many in less well-off social groups are still having tonsillectomies. If the rate in all social classes were the same, 8,000 operations could be avoided, saving £6m a year, he said.

In its new programme, Nice would look at areas where drugs or treatment costing the NHS more than £1m a year are of "doubtful effectiveness", said Andrew Dillon, its chief executive. Clinical guidelines will be developed on subjects such as the use of antibiotics, still being prescribed by too many GPs for children's sore throats even though they are ineffective against a viral infection.

Nice will also send out reminders to hospitals and GP surgeries about recommendations it has made which could save money - for instance, that home dialysis is better for patients and cheaper than making them go to hospital three times a week. If all 15% of kidney patients suitable for home dialysis received it - instead of 2% now - the NHS could save £9.7m.

Mr Dillon said he hoped the NHS would help identify areas for Nice to scrutinise.

The British Medical Association said doctors would welcome guidance on what works, but did not want a blanket ban on certain treatments, since there would be some circumstances where a doctor might deem them appropriate for a specific patient.

Where to cut waste

Sore throats: Doctors see 540,000 patients a year and a third ask for antibiotics. Liquid penicillin costs the NHS £11.5m a year; halving its prescription would save...

£5.25m

Heartburn and gastric problems: Proton pump inhibitors are widely prescribed. But using the cheapest drugs, as Nice recommends, could produce a yearly saving of...

£40m

Kidney dialysis: Home dialysis for all kidney patients who are suitable could save...

£9.7m

Colds and flu: Doctors will also be reminded about the appropriate use of flu drugs (they must be given within 48 hours of the first symptoms or they are ineffective and therefore a waste of money)